At REIWA’s Fremantle Branch meeting this week, prominent local agents raised concerns over the growing number of computer generated property valuations being promoted on line and in mainstream media.
The big banks have joined in recently with ANZ promoting its on-line valuation tool suggesting buyers informed about the “value” of a property for sale are smarter and better equipped to buy their dream home. ANZ wanting more mortgage business perhaps?
The problem is these “valuations” are – on the whole – complete garbage.
That’s because, at the push of a button, a data provider determines a property’s value based on a bunch of statistics provided by property portals or Landgate to deliver an estimated value that is notoriously inaccurate, making a mockery of offering the service in the first place.
Sales evidence from properties that are totally irrelevant to the property being assessed are included whilst relevant ones are overlooked, the data itself is either flawed or incorrect and the assumptions used in drawing the conclusions are vague and imprecise.
The computer does not know what is being offered for sale, it makes an assumption that the records it has from when it was last sold remains accurate today so it makes no adjustment for renovations, extensions or other improvements that may have occurred since.
One recent example assessed a property offered for sale as being on 247 sqm whilst the actual land holding was 738sqm. For a property worth about $1,100,000, it assessed the value at about $650,000, confused the buyer and disadvantaged the seller. It is common industry knowledge that on almost every occasion these on-line “guestimates” are notoriously conservative even in newer suburbs where they have some chance of being reasonably accurate.
I find it odd that property web sites continue to offer a service to buyers that so clearly disadvantages the very sellers that pay them for the right to advertise their property on the same site!
Real Estate agents are required by law to accurately assess a property’s market price and these on-line “valuations” should be held to the same level of account.
My advice to buyers is to do your own research, ask local agents for sales evidence and avoid relying on inaccurate assessments of value that are divorced from reality.
dG Principal
REIA Deputy President
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